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What Are the Major Assumptions of CVP Analysis

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What are the major assumptions of CVP analysis?


Definitions:

Capacity Utilization

The extent to which a firm or economy is using its installed productive capacity.

Rationalization

The process of reorganizing a company or system to make it more efficient and effective, often involving reductions in staff.

Abandoning Markets

The strategic decision to exit a market segment or stop marketing efforts in a particular geographic or product area.

Hierarchy Of Effects

A model describing the stages a consumer goes through, from awareness to knowledge, liking, preference, conviction, and finally purchase.

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